Denice R. Preston
Have you been told of new business ideas that have been successful and wondered, “Why didn’t I think of that”? I’ve launched seven businesses; however, the ones that didn’t succeed are among my favorite ones. For instance, I frequently think of Topgolf, The hugely popular golf driving range/sports bars appearing across the US. I’ve played the game since I was eight years old and have been socializing in bars since I was 18. However, it never crossed my mind to incorporate these two activities into a company. What did I do wrong?
The goal of this article is to assist you in discovering the next big idea through creative and business frameworks, which help you find fascinating concepts and generate fresh business ideas. I hope this article will lead to others kicking themselves while they watch your business’s growth.
The primary focus of every business opportunity is the customers. To make it possible for customers to purchase the product, it needs to offer more value to customers than the existing options. Therefore, the first step to finding an opportunity to grow your business is to find something consumers want but isn’t accessible or affordable.
Your business’s idea doesn’t have to be revolutionary. Those “big ideas” typically take enormous capital to bring to market; they’re not practical for most entrepreneurs. For instance, Meg Whitman and Jeff Katzenberg have raised $1.75 billion of pre-revenue capital to fund the mobile-based video service Quibi. It’s not easy to achieve that.
The most successful ideas are usually incremental improvements to existing products when the distribution and market are in place. The risks of developing a product are minimal, and the customers can easily comprehend the product’s advantages. My most profitable startup was an estate syndication business, the 50th business to join an established market that offered tax-advantaged investment opportunities to individuals. We quickly became a significant player in this market by providing customers with a level of service they couldn’t get from other companies.
The benefit of looking into your workplace is that if the current employer has customers, it is likely to have complaints relating to the needs of customers that aren’t being met. Most of the time, when customers aren’t happy with their needs, the solution they seek isn’t available elsewhere, or they’ll choose to go to a different vendor. If you can come up with solutions that address the problem of customers you can, you might be in the middle of a lucrative business chance.
I have a close friend who worked for a large firm that manufactures earth stations for satellites. The company he worked for was a production of equipment business and was selling sophisticated multi-million-dollar communication systems. My friend was constantly hearing potential customers mention that they could not afford their equipment but would prefer to rent space on the ground station of someone else. The company was overwhelmed with trying to create sufficient ground stations to satisfy its large customers’ demands. My friend quit and founded a data services firm that operated a single ground station and sold access to data to a few smaller customers.
Outside of work, I have business opportunities whenever I need something that isn’t easy to find at what I see as an acceptable price. I also pay attention when my relatives and friends complain about not finding an answer to their problems or dissatisfaction with things they bought.
Find a Differentiated Solution that can meet customers’ needs
Finding a market need that isn’t being met is always exciting, but there’s no business opportunity unless you find a way to satisfy the demand. Differentiated solutions can come from your creativity, expertise, or knowledge of where to go to find the needed creativity/expertise. I’m an example of how you don’t require an innate “gift” to develop innovative solutions. All you need is to get your head in the game or share the need that’s not met by others who may have specialized expertise that can aid.
I often hear of entrepreneurs who came up with an idea and were looking for a solution instead of looking at unmet market demand, e.g., the famous “build it and they will come” method. Start with an unmet need in the market.
Play Devil’s Advocate
I’ve launched seven companies; however, I’ve identified several more unmet needs. What made me decide to throw those businesses that I did?
It’s not difficult to identify the market’s unmet needs for which you can’t develop an innovative solution. It requires patience, research, and self-awareness to eliminate the majority of ideas. This is the typical process I follow.
Like devil’s advocate, I attempt to poke holes in any business opportunity I have come up with. The framework I employ to perform due diligence on business opportunities is built around the four essential components of any company: Product, People, Market, and money. The table below lists some significant aspects of conducting due diligence in each category.
I generally begin by searching for similar products comparable to the differentiated solution I’ve created. A similar product doesn’t mean it’s the end of death, as the market might be large enough to accommodate many competitors. However, suppose you come across an identical product from an organization struggling for a long time. In that case, that’s an indication that your product may not be as effective as you’d like unless your product is better suited to the needs driving the competitor to fail.
Another issue I frequently discover when I look at competitors is somebody else has a product that is superior to the one I came up with, so there isn’t any unsatisfied market need. If this occurs, I generally sigh in relief and leave.
Another thing that I do is to look at the general potential economics. What will it cost me to turn my idea into a product I could sell? What is the cost to make in bulk? What is an acceptable selling price? What is the maximum number I can sell?
If my back-of-the-envelope financial model does not indicate the possibility of a real windfall, then I generally leave. I call it a real windfall because, invariably, things will always appear less than they do when you create a thorough analysis of your financials.
Suppose I think I’ve got a viable business idea after working through all the information in the above table and any other issues that arise while conducting due diligence. In that case, I’ll share the concept with acquaintances, friends, or family members and ask them for honest comments. In addition to obtaining their opinion on the business plan, I also ask for their help with the proposed project. If your coworkers, friends, and family members don’t support (e.g., providing expertise or financial backing) the project, this could be a snub.
